Thursday, January 29, 2009

When the history of the financial crash is written, this is what will be said:

The federal reserve and its serial bubble-blowing policy, fractional reserve banking, the loss of America's manufacturing base, huge debts, spending trillions on imperial adventures in Iraq and elsewhere, and insane leverage and speculation using exotic instruments like credit default swaps were the biggest long-term causes of the crisis

The government could have prevented the crisis if it had heeded the warnings of those speaking the truth, but because it was politically easier, politicians pretended that they didn't understand what was going on, and tried to "kick the can down the road" so that it would be someone else's problem

Had the government let the markets deleverage, and let cancer of malinvestment clear itself out of the market, we would have been through most of the worst by the end of 2009. But by borrowing, printing and spending many trillions of dollars we didn't have, by artificially propping up leverage, and by taking other counter-productive actions, the government ensured a full-scale depression, and ensured that it would continue for years

Economies cannot prosper when the rule of law is destroyed and the government routinely lies. The current crash would have ended much sooner had the government been honest, and people trusted the government. The government's lies about the Iraq war, torture, spying, 9/11, and just about everything else destroyed people's trust that anything the government said was true. Even with sophisticated propaganda methods, one too many lies will destroy a government, a country and an economy. In addition, there were many Madoffs - titans of industry and finance and investment who were dishonest. Under the weight of dishonesty, no one trusts each other enough to do business, and the free market shuts down.

7 comments:

And us sheep just plod along believing that the President and the Players have our interests at heart. What they did have was self interest and greed to the highest degree. Dick Cheney on the way out said of this economic crisis "nobody could see it coming". Maybe he was too busy counting his money.

Starting 30 years ago they set out on a path to destroy the working class and by God they might just have done it. Maybe some day we will wake up and understand Free Market Theory is crap and was invented to do what we see now. Welcome to the Great Depression 2 brought to you by the same theory as the first one.

The current crash will not end without intervention. The mortgages were deliberately fashioned to go bad, disguised, bundled and sold as securities OUTSIDE the U.S, using the good name of the U.S.A. as bait. Then, the same crooks made CDS bets that the bad mortgages would, indeed, go bad. Poor minorities were the perfect patsies. The traitorous crooks threatened Congress that Bush would declare martial law if they didn't throw billions at them to cover their CDS bets. (Congressmen read that into the Congressional Record) We have to fix this in order to continue trading with the rest of the world. In case you haven't noticed, we make very little here now and rely on the world for a lot of essentials like food. Until Holder is in place, we cannot begin to fix the politicized Justice Department or prosecute and block the influence of anybody. We will continue to have the flow of MSM propaganda until we begin to enforce antitrust laws. (Reagan eviscerated anti trust, allowing this free market "too big to fail" monopoly mess to happen) We can do FOIA requests, but they will hit roadblocks until agencies can be reworked and reeducated that they are to uphold the Constitution, not some little outside economic fiefdom. This is not the same as the first Depression, even though some of the players are generational legacies. It is simplistic to suggest that you could just let the free market take care of it. Take care of it for whom? That is how we got here in the first place and there will be no quick fixes if we wish to avoid the new world order folks and keep this country.

Well said EQ and to add to it a little. Your absolutely right this isn't like the first depression it,is much, much worse. For anyone to still believe CDS's are good for the market it hard to believe. The sad thing about the mortgage crisis is that 80% of those who were put into subprime loans qualified for straight mortgages, but of course the brokers got 20K for a subprime but only 2K for a good one. Not only to the holders of the mortgages insure their know bad loans and recover the full sale price they then get to write off the loss when they sell that foreclosed house. Hell of a deal wouldn't you say.

Yes, welcome to Great Depression II, or better yet: The Very Great Depression.

The conservative estimate by the BIS (Bank of International Settlements) regarding outstanding derivative trades stands at almost $600 Trillion. This is a virtually unregulated market which some scholars believe is more accurately assessed at one quadrillion dollars. That is 100 times the GDP of the entire planet! For anyone to think that this system will somehow "correct" itself without wreaking mass havoc upon the entire globe is insane. And further government intervention will only make things worse. JPMorgan Chase is leveraged 4:1 to the tune of $98 trillion in derivatives. BoA has $38 trillion in outstanding derivatives. Citigroup has $37 trillion. Who is going to bail out these clowns? I suppose our new socialist president, along with his non-tax paying Treasury Secretary (with the collusion of the corporate controlled Congress of course), will begin asking the American taxpayer if they have a few extra trillion in their pockets...

Time to grow your own food and prepare oneself spiritually for coming hard times. Godspeed.

I would suggest even a Socialist President is better than a lying crook with a big gang. No conservative, or Libertarian will get us out of this mess. Past history would indicate the minute you get a budget balancing , cut all government program bunch in there be they proclaimed democrats or republicans we end up in the same place. Broke, and in a war or two, with a deficit added to greatly. We have proven twice in 80 years that hands off, no regulation, privatize all government functions doesn't work, and we have proved it in country after country. I certainly am open for new ideas, let's here some.

Nanotechnology of the future is said to make individuals capable of manufacturing anything they would need. I would assume this would lead to high tech food production, as well. And, alternative energy from solar, or something more exotic. If there is a collapse of the oil industry, ect, any suppression of technological advances in favor of continued profit will also collapse. If a little nano can make you a pile of gold, who cares, except that it is pretty to wear. If such tech advances are possible, it will end economics as we know it. Economics is based on limits causing value. The current system dates from the Knights Templar, bringing back the idea of banking and interest from the Middle East. It eventually supplanted the feudalist rein of Kings, but has proven to propagate its own feudalist aspirations. Unfettered capitalism devolves into all powerful monopoly kingdoms. Communism kills incentive. Both kill masses of people. There is a void here opening for a future system that incorporates the very real possibility of futuristic technology. Why continue to repair the box we are thinking in if underlying conditions could be entirely different if we intend it to be so?

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